Sunday, October 23, 2016

What Is SaaS And Why Is It Such A Popular Business Model?

What Is SaaS And Why Is It Such A Popular Business Model?


The software model commonly known as ‘SaaS’ (software as a service), though also sometimes referred to as ‘cloud’ software or ‘software on demand;’ is becoming increasingly popular both with developers and consumers. However, many people, including those responsible for making corporate software purchasing decisions for their businesses, are still unsure as to what SaaS is, and how it differs from other more familiar means of buying software systems and tools.

saas business model What Is SaaS And Why Is It Such A Popular Business Model?

Here we take a look at the SaaS phenomenon, including what it actually is, and how it can be of benefit.

About ‘On Premise’ Software Installation

saas business model1 What Is SaaS And Why Is It Such A Popular Business Model?

Traditionally, when a customer, be they a person at home who wants to use a software product (for example PhotoShop or Microsoft Office) or a business with thousands of users, wants to buy some software they  choose a suitable licensing agreement, pay for the software outright, and then are given a copy they can install on their hardware.

The software may be delivered by downloading it, or it may be on disks. Some licenses allow for the product to be installed on numerous machines, and others are limited to just one machine, with the license being valid for as long as that computer is in use, meaning it is important for businesses especially to choose the right licensing models for their needs. Some companies, like Microsoft, offer a whole range of different licensing choices which can be quite difficult for consumers to understand! An extra monthly fee may be charged for support.

This model is known as ‘on premise’, because the software itself exists on the license holder’s premises – whether it is on individual machines or on a server the customer owns.

How SaaS is Different

saas business model2 What Is SaaS And Why Is It Such A Popular Business Model?

SaaS is the most common alternative to this. The software and its supporting infrastructure are on servers owned and managed by the developer (although in some cases this may be outsourced to a hosting company), and users access it via the internet when they want to use it. The customer generally subscribes to the service monthly or annually, rather than buying a perpetual outright license. Any support and maintenance costs are included in the subscription.

Why is SaaS Such a Popular Choice?

SaaS is a popular means of delivering software for software manufacturers because it gives them a great degree of control over their infrastructure. It allows them to push out updates and security fixes very easily compared with having to distribute them to all of the individual users to install themselves, and it lets them analyze how their products are used to a more accurate degree – helping them plan for future versions and products. It also helps their financial planning because rather than having to predict monthly sales, they know they have a certain amount in monthly subscriptions coming in.

For consumers, SaaS is great because it doesn’t cause space to be taken up on their computer, or for businesses, require a whole server dedicated to running the software. All hosting and maintenance is taken care of by the software provider. It can also be more cost effective, as the subscription model lets a customer or business spread the cost over time.

Victor Brown is a part of the team at an established company offering server solutions to clients worldwide. He has a keen interest in blogging and often shares his expertise on the subject with readers through his articles.

Photo Credits: image 1 image 2 image 3


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